Cryptocurrency once had humble beginnings as a niche interest, relegated to being discussed only in obscure forums and closed circles. Years later, the reality today couldn’t be any more different. Financial institutions like JP Morgan have started offering crypto funds to its clients, countries have started accepting crypto as payment, and more people than ever are trading in crypto. Time […]
Cryptocurrency once had humble beginnings as a niche interest, relegated to being discussed only in obscure forums and closed circles.
Years later, the reality today couldn’t be any more different. Financial institutions like JP Morgan have started offering crypto funds to its clients, countries have started accepting crypto as payment, and more people than ever are trading in crypto. Time spent in the virtual world has increased more than ever during the pandemic period.
The rising metaverse and cryptocurrency adoption means additional eyes on adjacent crypto infrastructure. A decentralized autonomous organization (or a DAO), for example, is where decisions are made by their stakeholders without the need of intermediates/representatives. Cryptocurrencies such as Bitcoin are classified as DAOs.
More about DAOs
DAOs can be described as an open-source blockchain protocol governed by a set of rules, created by its stakeholders, that automatically execute certain actions without the need for any outside intervention. The rules of every single DAO are embedded into its code, so it knows exactly what to do with each transaction. Take Function X, the blockchain ecosystem we’ve developed for example. The number of FX coins mined in each block is decided by FX delegated in the blockchain, not via human intervention.
The rising popularity of decentralized finance (or DeFi), which cryptocurrency is a part of, has led to an explosion in existing DAOs. Many yield farming, decentralized exchange platforms, and blockchain projects are dependent on DAOs to keep them operating in a transparent way and beneficial to their stakeholders.
Crypto and DAOs
With people gaining interest in digital assets, it’s only natural that interest also spillover into the very system that allows it to run without a central authority. Many DAOs are also being used for many purposes to assist further growth of the blockchain projects with the proper incentives provided.
People and the future of DAOs
DAOs have been touted as the future of business thanks to its capabilities. DAOs enable the stakeholders to make crucial decisions on the blockchain.
In the interest of helping businesses get ahead, guides have already been published on how businesses can make DAO systems of their own. While attempts to create DAOs will produce different results, what’s clear is that people’s participation in DAOs will rise in the future.
At Pundi X we not only push for crypto adoption, we also want to facilitate people to participate in the creation of a DAO. With the Function X mainnet’s launch, holders of the FX coins get the chance to participate in block creation and receive block rewards via delegation to secure the network with 20 initial company-hosted validators which will be open for the public once the network matures later this year. Pundi X is also developing the custom chain built on the Function X network to verify real-world transactions, such as payments made on its blockchain-based point-of-sale devices. With that, users will be able to see how XPOS transactions happen in real time, thus making our original vision of “allowing anyone to buy crypto like buying a bottle of water” much more decentralized, and DAO-like.
Our strategy of getting users involved in the beginnings of a DAO represents how people evolve from trading in crypto and other digital assets, such as NFT to operating a project they have participated in. We see more and more crypto holders actually want to learn the behind-the-scenes of what enables crypto to function, and possibly have an impact on the process themselves.
In the future, we believe that businesses invest thoroughly in making a DAO for themselves. Though it will require extensive expertise in the fields of blockchain and possibly even crypto, the result will be a system that runs on its own and grows with their stakeholders. Pundi X has prepared ourselves to be able to demonstrate the best practice so that the businesses or organization can start a trial to experience.
DAOs could be the determining factor in which businesses survive the post-pandemic era and become sustainable because it enables more people to participate and build. It will not happen overnight. We will see a hybrid operating system for some existing businesses and the organization before migrating to 100% DAO. This transition could be similar to what we are using fiat and cryptocurrency today.